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Postal address: rue Wiertz 60 - B-1047 Brussels Offices: rue Montoyer 63 E-mail : edps@edps.europa.eu - Website: www.edps.europa.eu
Tel.: 02-283 19 00 - Fax : 02-283 19 50
Opinion of the European Data Protection Supervisor on the Commission Recommendation on preparations for the roll-out of smart metering systems
THE EUROPEAN DATA PROTECTION SUPERVISOR, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 16 thereof, Having regard to the Charter of Fundamental Rights of the European Union, and in particular Articles 7 and 8 thereof, Having regard to Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data
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, Having regard to Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data
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, Having regard to the request for an opinion in accordance with Article 28(2) of Regulation (EC) No 45/2001, HAS ADOPTED THE FOLLOWING OPINION:
1. INTRODUCTION 1.1. Consultation of the EDPS
1.
On 9 March 2012, the Commission adopted a Recommendation on preparations for the roll-out of smart metering systems ('the
Recommendation')
.
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The Recommendation was sent to the EDPS for consultation on 19 March 2012. 2.
Before the adoption of the Recommendation, the EDPS was given the opportunity to provide informal comments. Some of these comments have been taken into account in the Recommendation. As a result, the data protections safeguards in the Recommendation have been strengthened.
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OJ L 281, 23.11.1995, p. 31.
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OJ L 8, 12.1.2001, p. 1.
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C(2012)1342 final.
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The EDPS welcomes the fact that the Commission also consulted him formally and that this Opinion is referred to in the preamble of the Recommendation.
1.2. Objectives and background of the Recommendation
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The objective of the Recommendation is to give guid ance to Member States on preparation for the rollout of smart metering systems
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in Europe. The rollout is foreseen by 2020 for both the electricity and the gas markets and is subject to an economic assessment of costs and benefits. This assessment is to be carried out by each Member State by 3 September 2012.
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5.
A significant part of the Recommendation (Section I) is dedicated to data protection. Importantly, the Recommend ation calls for the preparation of a template for a data protection impact assessment
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('the Template') and its submission to the Article 29 Data Protection Working Party ('the WP29') for advice within twelve months of the publication of the Recommendation.
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6.
The first draft of the Template is currently under preparation by Expert Group 2 of the Commission's Task Force on Smart Grids. The Task Force has been established by the Commission prior to the adoption of the Recommendation, to give advice on smart grid issues. One of the subgroups of the Task Force, Expert Group 2, focuses on security and data protection aspects. The group comprises mainly ind ustry representatives (with some representation of civil society and consumer groups).
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7.
The Commission pursues a 'soft law' approach combining (i) a Commission Recommendation covering data protection among other issues and (ii) further guidance to Member States in the form of a template for a data protection impact assessment, which is to be applied voluntarily by industry participants. The approach is based on the experience gained from the development and revision, following WP29 comments, of the 'Industry Proposal for a Privacy and Data Protection Impact
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For a brief introduction to smart meters and smart grids, please see Section 2.1 below.
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The roll-out and the cost-benefit analysis are required under (i) Directive 2009/72/EC concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC (OJ L 211, 14.08.2009, p. 55), and (ii) Directive 2009/73/EC concerning common rules for the internal market in natural gas (OJ L 211, 14.08.2009, p. 94). The Commission Proposal for a Directive on energy efficiency (COM(2011) 370 final) ('Energy Efficiency Proposal'), currently before the legislators, includes additional provisions on smart metering.
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With regard to data protection impact assessments, it is to be noted that the Commission Proposal for a revised general data protection framework plans to make data protection impact assessments mandatory in some situations and provide further guidance on how such an impact assessment should be carried out.
See Article 33 of the Commission proposal for a Regulation on the protection of individuals with regard to the processing of personal data and on the free movement of such data (COM(2012)11 final). See also paras 200-205 of the 7 March 2012 EDPS Opinion on the data protection reform package, available at http://www.edps.europa.eu/EDPSWEB/edps/Consultation/Reform_package;jsessionid=46ACCFDB9005EB950DF9C7D58BDE5377.
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See para 5 of the Recommendation.
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More information on the work of the Task Force and of Expert Group 2 is available on the website of the Task Force at
http://ec.europa.eu/energy/gas_electricity/smartgrids/taskforce_en.htm
.
3Assessment Framework for RFID Applications'.
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However, the Commission has not excluded the need for legislative action at national and/or at the European level.
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1.3. Objectives, main messages and structure of the EDPS Opinion
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While this EDPS Opinion is adopted in response to the Commission Recommendation, it is not strictly limited to the content of this Recommendation, as there are important data protection aspects of the rollout of smart metering which are not fully addressed in the Recommendation itself. The EDPS also recalls in this context his formal comments on the Energy Efficiency Proposal.
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9.
The EDPS Opinion has three main objectives and messages: -
First, the Opinion evaluates the Recommendation: it welcomes the Recommendation as a first step, highlights its achievements, but also criticises its shortcomings, including its insufficient specificity. -
Second, while the EDPS regrets that the Recommendation has not provided more specific and more practical guidance on data protection, he considers that some guidance can still be given in the data protection impact assessment Template, which is currently under preparation. Therefore, the Opinion provides a number of targeted recommendations on the Template. -
Third, the Opinion calls on the Commission to assess whether, beyond the adoption of the Recommendation and the Template, further legislative action is necessary at the EU level and provides a number of targeted recommendations for possible legislative action. 10.
In light of these objectives, the Opinion is structured as follows: -
Section 2 provides a brief introduction to the concepts of smart meters and smart grids and explains the data protection concerns they raise. -
Section 3 provides general comments on the Commission’s approach followed in the Recommendation, discusses the need for further legislative action, and gives recommendations for a possible legislative action. -
Section 4 outlines some of the key issues that - in the view of the EDPS - should have been addressed more specifically in the Recommendation. Some of these recommendations may also serve to guide national or European legislators when considering further regulatory or legislative action. Others may be addressed in the data protection impact assessment Template to be developed. -
Section 5 provides a few targeted recommendations on the data protection impact assessment methodology and on the content of the Template to be developed. These should be read in conjunction with Section 4.
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See http://ec.europa.eu/information_society/policy/rfid/documents/infso-2011-00068.pdf and http://cordis.europa.eu/fp7/ict/enet/documents/rfid-pia-framework-a29wp-opinion-11-02-2011_en.pdf .
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It is noted that at the present stage no evaluation of the effectiveness of this soft law approach for the field of RFID has been provided, nor is there any generally available information indicating effectiveness of the approach.
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EDPS Letter of 27 October 2011 to Mr Günther H. Oettinger, Commissioner for Energy on a proposal for a Directive of the European Parliament and of the Council on energy efficiency and repealing Directives 2004/8/EC and 2006/32/EC, available at http://www.edps.europa.eu/EDPSWEB/webdav/site/mySite/shared/Documents/Consultation/Comments/2011/11-10-27_Letter_Oettinger_EN.pdf .
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2. DATA PROTECTION CONCERNS RAISED BY SMART METERS AND SMART GRIDS 2.1. Smart meters and smart grids: a brief introduction
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11.
Smart gas and electricity meters are installed in the homes of energy consumers just as traditional gas and electricity meters. A key feature of smart meters is that they can provide data via remote communications between the meter and energy suppliers, network operators, and other third parties. Smart meters also enable more frequent communication between the meter, the energy supplier, and other parties. Instead of less frequent (e.g. annual or quarterly) readings carried out by physical inspection of the meters, as is the case with traditional meters, with smart meters it will be possible to read and recor d energy consumption much more frequently, for example, every fifteen minutes.
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As a result, there is a very significant increase in the amount of energy consumption data, which can become available to the consumer but also to third parties. 12.
The implementation of smart meters is considered a pre-requisite for the smart grid. The smart grid is an intelligent electricity network that combines information from users of that grid in order to plan the supply of electricity more effectively and economically compared to what was possible in the pre-smart environment. 13.
Smart meters, among others, will enable 'demand response' and 'dynamic' or 'time-of-use' pricing for electricity. This is said to be increasingly important with the connection of more and more renewable energy sources to the grid
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. Instead of a single or other simple (e.g. night and day) tariff, dynamic pricing and more complex tariff structures are expected to be introduced to allow 'demand response', in other words, to allow customers to buy electricity at constantly changing prices, thereby cutting demand at peak times, and thus, resulting in a lower need for peak capacity as well as better integration of renewable energy sources
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. In parallel, in the not-so-distant future, households may start using 'smart' devices that use information obtained from smart meters, such as 'smart washing-machines' that will turn on, or an electric vehicle that will be charged, when electricity is cheaper.
2.2. Data protection concerns
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The Europe-wide rollout of ‘smart metering systems’ enables massive collection of personal information from European households, thus far unprecedented in the energy sector. The potential intrusiveness of collection is increased by the fact that data are collected, which may infer information about domestic activities: data may track what members of a household do within the privacy of their own homes.
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Many different definitions exist for smart metering and smart grids. This introductory description is, in part, abridged from page 4 of Opinion 12/2011 of the Article 29 Data Protection Working Party on smart metering, adopted on 4 April 2011 (WP 183), available at http://idpc.gov.mt/dbfile.aspx/WP_183.pdf . It is provided purely for informational purposes and is without prejudice to the need for a more precise definition of smart metering systems and smart grids in the data protection impact assessment Template to be developed, and/or in any new legislative or regulatory instrument on smart metering and smart grids.
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See Para 42(b) of the Recommendation.
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To illustrate: solar and wind energy depends on sunny or windy whether conditions, and dynamic pricing could encourage the demand for electricity to be shifted to periods when solar and wind installations will be working at high capacity.
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This may have significant economic effects as peak capacity is one of the most important parameters in network design and a key factor for investment and costs.

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